Lenovo, Goldman Consider Investment Bank Joint
Venture
Lenovo, China's leading domestic computer maker, and
Goldman Sachs are considering setting up a joint venture
investment bank to serve the finance needs of clients
in the growing Chinese market.
Initial discussions have focused on Goldman
Sachs investing US$100 million on a restructuring
of China
Southern Securities, which would hold 33% of the new
entity. In January, Goldman then denied any rumors to
invest in China Southern Securities. Lenovo would hold
33% through its holding company, and the remaining 34%
would be held by leading Chinese investor Fang Fenglei
who would participate in the executive management.
Total capitalization would be US$300 million.
The 52 year-old Fang Fenglei is known as a financial
wizard in investment banking in China, and is one of the
returnees to China, after spending some time in the West
to learn western financial practices. He has served as
the chairman of the Bank of China in Hong Kong, and in
senior management of the Bank of East Asia, and was one
of former premier Zhu Rongji's trusted advisers.
The China
Securities Regulatory Commission, which is currently
managing China Southern Securities, has already publicly
stated that it will support this new joint venture. If
the deal goes through, it would set an important new model
for joint ventures in China. This is known as the "China-foreign
joint capitalization, market for management" model.
Fang Fenglei is known to be a leading proponent of this
model, and pushed it earlier on. At the time, it did not
catch on, but now the timing is believed to be right.
Earlier, Lenovo had reported that earnings for its third
quarter had only gone up 2.3% compared to the same period
one year ago. The company has come under strong pressure
domestically from Dell,
and the company has cut 5% of its workforce.
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